© Analysis | January 13, 2014

M&A activity at its lowest since 2009

Industrials M&A in 2013 was at its lowest point since 2009 (USD 60.6bn) with USD 127.4bn worth of deals.
The year marked the second consecutive decrease in deal value, with a 20.1% decline compared to 2012 (USD 159.4bn) and down 35.9% compared to 2011 (USD 198.7bn).

The Industrials: Electronics sub-sector experienced the largest decline. Its deal value dropped 38.2% from 2012 (USD 23.9bn) with deals valued at USD 14.8bn in 2013. Industrials: Products &Services, which generally constitutes the bulk of Industrials M&A, also saw an 18.3% drop in value (USD 128.9bn in 2012 vs. USD 105.3bn in 2013).

Meanwhile, the Industrials: Automation sub-sector saw USD 7.3bn-worth of deals, up 11.1% from USD 6.5bn in 2012. As a result, its share of Industrials M&A went up slightly from 4.1% in 2012 and stood at 5.7% in 2013. A notable transaction in the Industrials: Automation sub-sector was the acquisition of UK-based Invensys by Schneider Electric, a France-based company, for USD 4.6bn. This deal contributed just over 63% to the sub-sector’s value for the year.

Industrials deals declined in all three of the main regions in 2013 compared to 2012. However, for other countries worldwide, there was a 157% increase by value to USD 10.8bn compared to USD 4.2bn in 2012.

While North America (USD 46bn) decreased 21.5% in value from 2012 (USD 58.6bn), Europe was hit the hardest with a 34.8% drop in deal value (USD 37.1bn in 2013 versus USD 56.9bn in the previous year). The bulk of scant industrial M&A activity remains oriented toward German speaking countries and the United Kingdom. British manufacturers are expected to enjoy faster growth than any other western European economy in 2014 due to rising demand at home and abroad, according to a recent EEF report. Potential takeover targets include precision toolmaker Renishaw, engineering group IMI and Spectris.

Asia-Pacific experienced the lowest decline by value, down 15.5% with deals valued at USD 33.5bn. It was also the only region to see more deals (373) in 2013 compared to 2012 (310), representing a 20.3% increase. One explanation for the climb is the mounting domestic consolidation and restructuring activity in China and South Korea. The Chinese government is actively trying to address over capacity and has been encouraging merger and consolidation, particularly in steel, aluminium, polysilicon and shipbuilding sectors.


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